The end of the Great Migration: A factory town's downward slide

Workers file out of Paul Miao's factory in Dongguan. Miao's factory is operating with a twenty percent worker shortage and is forced to cancel orders due to a labor shortage in the Pearl River Delta, once the destination for tens of millions of migrants. - Rob Schmitz/Marketplace

China’s great migration started with farmers boarding crowded trains in Sichuan, Henan, and Hubei - poor provinces in China’s interior. A day or two later, they arrived here, along the Pearl River Delta, just north of Hong Kong, and became factory workers.

Nearly a quarter of a billion people made this journey over and over for the past two decades. It was the largest human migration the planet has known, and it was fueled by our desire to buy things and by the Chinese hunger to make a better life for their families.

Benjamin Schwall’s eyes light up as he remembers what the factory town of Dongguan was like in the 1990s.

"It was almost scary to walk into a factory, because seriously you would have hundreds of people lined up in circles around the gate pushing to get forward to read the signs about what kind of worker they were hiring," Schwall says. "You kind of had to push your way to get in and guards would yell at them and bark at people.

"You’ve seen the movies where people are trying to leave the city before the invading army comes? It was like that, but they weren’t trying to leave. They were trying to get in."

Schwall is president of System Technology Group. For 15 years, he’s helped foreign companies make their products in Dongguan. He remembers a time when he’d bring businessmen in for a factory visit and each of them was assigned a personal tea pourer. Whenever they’d take a sip, the cup was refilled.

These days, a teacup in Dongguan no longer runneth over.

"Now, visually, you can see it," says Schwall. "You don’t have people standing outside of [the] gate. But just drive down the street, and every door you pass has a big red sign, always the sign seeking workers are red colored. You just look and see how much red is on the street, and you have a good gauge of the situation."

The street outside Paul Miao's factory is nothing but red - a desperate search for workers. Inside, those he can keep on the assembly line cut and stitch leather. Miao’s company makes handbags for Coach, Armani, Fossil, and other luxury brands. He says his clients have downsized their orders because his company can no longer meet the demand.

"Each production line, ideally, should have at least 300 people," says Miao, "but we have a few production lines that only have 150-some, or 200-some.”

Miao's operating with a 20 percent worker shortage and by the looks of his recruitment efforts, he says, it's going to get worse. "We can have five, 10 people come, but half of them wouldn't want to stay," Miao says. "They come and take a look at the factory and they don’t want to stay."

Miao says if they don’t like what they see, they can just move to the next factory with a red banner in front of it. So, Miao's factory has been late on orders this year for major brands, forcing him to air mail some of them at the last minute. When that happens, he makes no profit. Overall revenue this year is down twenty percent. Want to know how this labor shortage is impacting you?

Take a look inside that wallet you bought, Miao notes. "When times were good, the brand would put leather for the credit card slots, the inside, right?," Miao says, demonstrating with one of the bags on his assembly line. "But nowadays, they use vinyls. You pay the same money, but you get a lesser product as far as value goes."

At another Dongguan factory, a skeleton shift of workers use hammer to fasten soles to leather shoes. Ten years ago, more shoes were manufactured in Dongguan than anywhere on Earth. Not anymore—the labor-intensive process of shoe making has moved to place like Vietnam and Indonesia. That's where Iris Chou, CEO of Emperor Footwear has moved her shoe factories. Like many factory owners in Dongguan, she turned her Chinese factory into an R&D center after she lost a third of her workforce earlier this year.

"It’s very frustrating to continue the production here, because the mentality of the Chinese," says Chou. "They tend to want to open up their own business in the future. Or even in Dongguan, they don’t live here, their hometown is somewhere else, so they prefer to go back."

That’s the goal of factory worker Xu Duohua, who's made handbags at Paul Miao's factory for 15 years. She plans to move back to her hometown in Sichuan province next year. “Everyone’s hometown is developed now. Mine, too," Xu says. "Now there are a lot of factories near my hometown, making products like alcohol and even handbags."

For her boss Paul Miao, that’s another worker gone, and he may be packing up soon, too. His company has started a factory in an undeveloped part of the Philippines.

Very rural, he says.

He says it reminds him of Dongguan when he first arrived here 20years ago, before the factories, before trainloads of workers arrived, before China became the economic powerhouse it is today.

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Rob has won several awards for his reporting on China, including two national Edward R. Murrow awards and an Education Writers Association award. His work was also a finalist for the 2012 Investigative...